Nothing wrong with asking the "are we on the market" and other questions at the appropriate times. It is only a difficult and an unwanted question to a "Claytons Reserve" auctioneer.

It’s heartening to see more buyers sticking up for their rights at auctions by asking questions – especially about reserves and whether the property is ‘on the market’.

Because not all sellers and agents are respecting the auction system. Some agents are passing  in properties and then reporting an inflated reserve – which we call a ‘Claytons Reserve’. This kind of practice is, or should be, illegal and it’s not the Aussie way.

Quoting is not an exact science, but continued deliberate misleading quoting and Claytons (or false) reserves are hurting buyers, as well as sellers (through buyer mistrust) and the auction system itself. To try and negotiate around unhelpful quoting you need to ask the right questions at the right times.

A seller has a right to ask whatever they want for their home – but they don’t have a right to mislead you.

If you are told something by an agent why shouldn’t you expect it to have a modicum of truth? If Myer or Harvey Norman said a fridge was for sale at $1100 and it wasn’t, there would be hell to pay. But a seller can say a home is for sale at $2,000,000, and then say: “Whoops, I actually meant $2,500,000” -  and somehow that is fine – no problem – no consequences.

If sellers want the big price they should say so from the start – before you spend money on inspections and time and effort. 

That means that as buyers, wherever you can, you need to ask questions of those auctioneers who are not playing fair.

Asking the question is not just about fairness –  it is also about sensible negotiations.

If you want to be a good negotiator you have to stick up for yourself. You need to question and keep questioning unfair and/or illegal tactics.

And don’t feel you are imposing on the agent or the seller by asking questions. Only unreasonable sellers and dishonest agents would consider your questions an impost.

Questions to Ask

Towards the end of the campaign (before you spend money on pest and building and legal and valuation checks)

1. Do you have a reserve or can you give me an indicative thought on it?
2. Does the quote you are giving me relate to the reserve or (as agents loosely put it) to ‘buyer interest’ (which means very little if the reserve is miles away)?
3. If you are thinking of spending time and money on due diligence, tell the selling agent you are asking the questions because you want to avoid unnecessary expense.

On auction day

1. If the auctioneer doesn’t specifically say in their spiel that they have a reserve – put your hand up and ask them: “Is there a reserve?”
2. If the answer is “yes” then follow up with: “Is it near your quote?” If “yes” then great, go ahead and bid.
3. If “no” – well … it’s up to you. But a good follow up question is: “Do you have any idea what it may be… ?” Another good follow up question might also be: “Well, what are you doing here Mr Auctioneer if you have no idea?” But I digress… You can choose, as many buyers do with Claytons (not real) auctioneers, to not bid and walk away instead.

During the auction

Once bidding has reached the quote level, all bidders should start asking the question: “Is it on the market? Is it on the market?”

Some other statements worth making during the auction:

1. “I’ll bid an extra $20,000 if it’s on the market” – please only say this if you will, otherwise you are being unethical and actually you are not negotiating well.
2. “I have more money if you put it on the market” – please only say this if you do, otherwise you are being unethical and actually you are not negotiating well.
3. Why not think about ‘backward bidding’ (making a lower bid) if bidding has gone well over the quote and the property is not on the market? Why not stick up for other buyers, even if they are your competitors, in these situations? We do.

These measures can work well if a number of buyers band together to say these sorts of things in unison. It’s sort of like the blue team vs  red team in Masterchef. Work together to get it on the market then fight it out fairly.

It may not work, but at least you have tried. There are risks associated with any action – professional buyer representation is another option. And of course you can, as many buyers do, walk away from a “Claytons” auction and a “Claytons” auctioneer if you don’t like the answers to your questions.

Please also note

1. Keep yourself decent – no rudeness
2. Don’t involve yourself if you are not a real bidder – that’s illegal

If you are told a ridiculous or Claytons reserve compared to the quote when a property is passed in to you, you have a right to note it down and tell the agent and the seller and report both of them to the:

• ACCC
• Consumer Affairs
• REIV

Also, if you have spent money on pest and building and legal checks and the reserve is well above the quote – why not send the bill to the agent and to the seller and ask the question, can I get reimbursement? If you don’t get anywhere, then why not take it further – and ask the same question at VCAT? (Although at present it seems you don’t have a case unless the reserve is more than 15% over the quote.)

If you want to negotiate well, then you or your representative need to keep asking appropriate questions when faced with these situations.

We Only Buy Homes

Please note: We support Bennison Mackinnon’s ethical approach. It’s not a question of 100% accuracy (that is not possible) – it’s not a question of best representing sellers (that is expected) - it’s a question of sticking up for your rights.  Good negotiators keep asking the right questions.

Iain Carmichael aka "Captain Grumpy" - we have a nickname for every auctioneer. There is a reason Iain has been a top "James Market News" street auctioneer for many years and it's not because he is easy on buyers. He isn't. He is a top auctioneer because he extracts as much as he can from buyers at auction. The fact he and Benmac quote the reserve ethically to buyers is not the reason he is highly thought of; however it proves that you don't need to mislead buyers to be a great auctioneer. Buyers - keep asking questions.